MicroHoo-Ying Eyeing Global Reach, What About Ask?

There’s a report from Reuters this morning that Microsoft and Yahoo are considering expanding the scope of their search deal “outside the United States”:

Microsoft Corp Chief Executive Steve Ballmer said on Thursday the company could look to extend its search engine partnership with Yahoo outside the United States, if it gets regulatory approval.

Wasn’t that already the intention? I thought it was a global deal already. European regulators wouldn’t be considering it if it didn’t apply to their markets; they wouldn’t have jurisdiction. So I guess I’m a bit confused I guess.

Regardless, if either the EU or US Department of Justice disapproves the deal it will kill the whole thing globally in all likelihood. I would expect approval although it’s also possible that limitations and conditions could be attached by regulators.

Reportedly Barry Diller, CEO of IAC Corp., wants to sell Ask — perhaps feeling he’s ridden the wave as far as he can (with some disappointment). If so, the most likely buyer would be Microsoft according to widespread speculation. It would allow Microsoft to grab some incremental but meaningful share of the market. The question would be at what price?

Timing is huge here. If Ying/MicroHoo were to gain approval from regulators, or the appearance of forthcoming approval were strong, the value of Ask to Microsoft is less than if the Yahoo deal were not to go through. In the latter case Diller could exact a higher price than in the former. There could be other buyers out there for Ask (e.g., News Corp., Comcast?) but Microsoft is the one with more to gain from adding scale.

According to comScore, Ask maintains a small but meaningful core following:

That respresents 718 million queries in September, according to the metrics firm. However iCrossing recently said it has seen referrals to its clients’ sites from Ask drop “precipitously.”

Postscript: The following was a clarification that I received in email from a Microsoft spokesperson:

[T]he Microsoft-Yahoo! agreement does apply outside the United States. As it’s written, it must be approved by regulators in the U.S. and Europe in order to go into effect. As soon as those regulators give approval, the agreement goes into effect worldwide, although implementation in a specific country is postponed if regulatory approval is required there and it is not yet obtained. But that will not postpone implementation in other places.

About The Author

Greg Sterling is a Contributing Editor at Search Engine Land. He writes a personal blog, Screenwerk, about connecting the dots between digital media and real-world consumer behavior. He is also VP of Strategy and Insights for the Local Search Association. Follow him on Twitter or find him at Google+.